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On a trip to Africa in 1990, Peter Scott was moved to tears by
the deforestation he encountered. Determined to do something, he
spent 15 years as a consultant for governments and NGOs in the
developing world, designing fuel-efficient cooking technologies
that didn't rely on wood. Through his work he taught people in 20
countries to build and sell more than 400,000 clean stoves, bread
ovens and food dryers.

Still, Scott knew he could do more. In 2010 he formed Vashon
Island, Wash.-based Burn Design Lab, a nonprofit organization
that creates sustainable stoves for developing countries to
build and distribute. The following year he founded Burn
Manufacturing, the for-profit arm that licenses the Lab's
designs to build and sell stoves in Africa. Scott scored a $1
million loan from a Fortune 10 corporation for Burn
Manufacturing; now he's working on securing a $3 million loan
from the U.S. government's Overseas Private Investment
Corporation and trying to raise an additional $2 million in
equity funding.

Burn Manufacturing set up shop in Kenya late last year and
received its first order for 8,000 stoves. The company is on
track to build 100,000 stoves by the end of 2013 and aims to
build and sell 3.6 million units in Kenya, Rwanda, Tanzania and
Uganda over the next 10 years.

Scaling his vision so he could reach more people and save more
forests--and convincing others to fund that vision--required
Scott to do a lot of pitching and educating. "People have
misconceptions of Africa about it being a poor place to invest,"
he says, noting high historic rates of return on investments in
the continent. According to the U.S. State Department, Africa is
home to at least six of the world's 10 fastest-growing economies.

Welcome to the world of impact entrepreneurship, which places as
much importance on socially conscious activities as on profit.
With consumers increasingly weary of perceived corporate greed,
companies peddling products and services that tackle societal and
environmental ills are gaining a following. Incubators aimed at
impact entrepreneurship are sprouting up. And investors are
warming to the do-good trend. According to a survey conducted by
First Affirmative Financial Network (FAFN), a Colorado Springs,
Colo.-based advisor on socially conscious investments, most
investment professionals say impact investing is on the rise and
becoming more widely accepted by institutions.

"There's this whole new thing happening where people want to do
social good, and they're recognizing the limitations of just
straight charity," Scott says.

Profits First
Wanting to change the world is not a business plan. It may seem
counterintuitive to think about how you'll make money as a social
entrepreneur, but if you want to have a lasting and far-reaching
impact, it's essential. "An impact business can't stand on one
leg," says FAFN president Steve Schueth. "It's got to have a good
business model. It's got to have a good operating team. It's got
to be financially sound."

The fact that your business helps feed children or repurposes
plastic water bottles may initially entice a philanthropic
investor, "but the impact itself is not going to sell the
business," Schueth cautions.

Sharon Schneider, CEO of Moxie Jean, a website that resells
children's clothing, had to iron out a few wrinkles before her
collaborative-consumption idea caught on. In 2011 she started as
a "Netflix for baby clothes." The business owned all the clothes,
and customers paid a monthly fee to "rent" them for as long as
they wanted. Parents, frustrated with how quickly their kids
outgrew clothing, told Schneider they loved the idea. She won a
$20,000 pitch competition, was accepted into the prestigious
Chicago accelerator Excelerate Labs and received $25,000 in seed
money.

But despite trying tactics such as Google ads with all sorts of
keywords, she found few subscribers. Market research revealed
that customers saw her subscription model as too much of a
commitment, putting pressure on them to keep baby clothes they
didn't own in good shape.

"People were saying, 'Why don't you sell them new clothing every
month?' But that's not the business I'm interested in," says
Schneider, who is passionate about reducing wasteful consumption.
"The social impact is built into my model. I couldn't stop
reusing clothes and have the same business. I fully intend to
make a lot of money, but I intend to do it in a way that I feel
good about."

Last July Schneider relaunched Moxie Jean on her terms--as an
online resaler of kids' clothes, no subscription required.
Parents buy clothing off the site, or they can send in gently
used items in exchange for cash or credit. Now, she says,
"business is going like gangbusters," with sales increasing at a
rate of 50 percent a month.

Money With a Mission
As with any for-profit venture, partnering with the right people
is essential. Because your business has the added element of a
social mission, the team becomes even more critical. When seeking
investors, it's not enough to go where the money is. "You need to
go with the right intentions behind the money," says Taryn
Goodman, director of impact investing at San Francisco-based RSF
Social Finance, which funds nonprofit and for-profit social
enterprises. In other words, you need to find investors who share
your goals and mission for the company.

Consider Burn Manufacturing's quest for equity investors. Scott
is specific: "We're trying to find an ideal partner who gets our
mission and is not looking for an exit strategy in three years
and is happy with an 8 percent return on their money."

But finding like-minded investors can be tricky, says Michael
"Luni" Libes, founder and managing director of Fledge, a Seattle
incubator for socially conscious businesses. "They don't wear
name tags," he says. "Or sometimes they wear name tags, but it
doesn't say what their style is." That's why you need to sit down
with prospective investors and see what makes them tick. If
they're more concerned with finding the next Facebook, they might
not be right for you.

Rahier Rahman went further. Founder of Pangea, a Chicago-based
provider of prepaid financial services to underserved populations
worldwide, Rahman spent two years researching key venture-funding
and business-development players in his niche. That way, he says,
he didn't have to "spend two weeks in Silicon Valley pitching
people who don't care about the space." Nor did he have to
educate potential investors about the group he wants to help: the
2.5 billion people worldwide who don't have bank accounts, credit
cards or other financial services. "They already know all that,"
Rahman says. "They have already made significant money in the
'underbanked' space. So I'm really able to build consensus around
our platform."

Burying the Lead
Selecting which partners and investors to woo is only half the
battle. Knowing how to pitch them is equally important. "The
biggest thing I tell social entrepreneurs is actually not to
define themselves as a social entrepreneur," says RSF Social
Finance's Goodman.

Many people, she explains, mistakenly believe that there's no way
a social-impact business can make money, or that it's a
"nonprofit in disguise." It can be far more effective to focus
the pitch on the social or environmental outcome of the business,
rather than on your own philanthropic ambitions.

FAFN's Schueth agrees. When pitching, he advises, first sell
investors on your business model, operating team and ability to
go to market. Then you can say, "This business is designed to
have a very positive impact, and here's how we're going to
measure it." The more specific your metrics are, the better your
shot at getting funded, he adds.

Scott is banking on data to get his mission across. Among the
metrics he has shared with potential partners and investors: One
of his $30 Burn stoves reduces energy use by 50 percent, saves
households $250 a year in fuel costs and reduces indoor air
pollution--a contributor to the deaths of nearly 2 million people
a year.

"All those metrics are really important," Scott says. "When we're
talking to impact investors and equity investors, they're really
looking at both of those things: Is it sustainable? Is it
profitable? And is it having an impact?"

Burn's metrics speak volumes. In presentations, once Scott starts
rattling off numbers to his audience, "90 percent of them get it
in five minutes, and 10 to 20 percent are mobilized to do
something about it," he says.

Of course, there are other numbers that mean much more to him.
"Even if we only met 10 percent of our metrics," he says, "we'd
still be saving 12 million trees."